The Ministry of Food and Agriculture (MoFA), in collaboration with GCB Bank in its capacity as creditors, has initiated moves to resuscitate the production of rice at Aveyime in the Volta Region, after years of inactivity.
Rice production at Aveyime has stalled due partly to mismanagement and lack of funding on the part of Prairie Volta Limited (PVL), the previous managers.
The PVL was formed in 2007 as a joint partnership between the Government of Ghana and Messrs Prairie Texas Incorporated (PTI), to take over rice production at Aveyime after the Quality Grains Company scandal.
The government for its part contributed the assets of the erstwhile Quality Grains Company in the form of loans and equity valued at US$8.2 million, while PTI under the agreement was required to inject a working capital of US$3 million into the new company.
PVL suffered from undercapitalisation from the onset following the failure of PTI, the American investor, to provide the needed working capital of US$3m as required under agreement between it and the Government of Ghana.
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The warning signals that PTI never had the financial wherewithal to support the project became obvious when on the date of signing the shareholders agreement, PTI sold part of its acquired shares to GCB Bank to raise funds to start operation.
This may account for the excessive borrowing of PVL under the management of PTI from local banks, namely GCB Bank and adb Bank.
According to a statement signed by the Head of the Legal Directorate of MoFA, Mr Seth Dumoga, and made available to the Daily Graphic, as of February 28, 2018, PVL’s indebtedness to GCB Bank and on which interest continues to accrue, stood at GHc16, 578, 596.19.
In addition to this, the signed 2015 audited financial statement indicated PVL owed GH¢25 million and GHc30 million to adb Bank and the Government of Ghana respectively.
The statement said further investigations also revealed that at the start of 2008, PTI’s contribution to PVL stood at US$948,000, but by the end of that year, PVL transferred over a million dollars to the US either as investments or monies transferred to themselves.
These capital flights out of the company, coupled with dollar denominated salaries to American expatriates, explain why the company, within a year of its formation, ran out of money.
In order to salvage the huge investments the government and the local banks have made so far and to actualise the dream of making Aveyime a cradle of rice production in the country, MoFA, under the Minister, Dr Owusu Afriyie Akoto, has undertaken a comprehensive review of the operations of PVL which ceased over the past three years.
As part of measures to inject fresh blood into the project, MoFA and the creditor banks, notably GCB Bank, have taken the bold step to appoint an administrator as permitted under the Company’s Act to run the Aveyime company to pay back the debt owed them by PVL.
The administrator is expected to appoint a Technical Rice Operator who will raise capital to run the company.
The technical operator will work with the MoFA’s Youth in Agriculture Coordinator to train young people in the area including students of the agriculture colleges in commercial rice farming.
According to a source at MoFA, the ministry is now looking forward to GCB Bank expediting action with the appointment of the administrator so that action can begin at the start of this year’s minor season which starts in August.
At full production, the Aveyime project has the capacity to provide nearly one-third of the nation’s rice requirement.